- Canadian budget unveiled after 4:00pm
- Oil prices are steady to low on hopes for a diplomatic settlement to the Iran war
- US dollar is steady to modestly higher in early NY trading
USDCAD open (6:00 pm): 1.3957, overnight range 1.3943-1.3983, close 1.3979, WTI $88.71, Gold $4,127.01.
The Canadian dollar drifted sideways as global markets kept chewing over what the US midterm results mean for them. There was little appetite to push the pair either way, and the overnight session passed without incident.
Ottawa tables its budget for the coming fiscal year today, though most of the big-ticket items have already been leaked or announced. Among them are an extension of the tax break on one of the many levies baked into a litre of gas, along with the much-hyped productivity mega deduction for business write-offs.
WTI has climbed to $88.86 from an Asian low of $86.66 on bets that the midterm results open an exit ramp from the Iran war. Reports of two tankers and a tug burning in the Strait of Hormuz were a sharp reminder that the shooting hasn’t stopped, and that helped keep a floor under crude.
With Democrats in control, investors are betting on smaller deficits and on Congress leaning on the White House to bring the Iran war to an end. If that happens, traders might finally get to stop watching the White House soap opera and go back to the duller business of economic data and what it means for interest rates.
Asian equity markets closed higher. Hong Kong’s Hang Seng rocketed up 3.67%, Australia’s ASX 200 jumped 2.61% and Japan’s Topix added 1.16%.
As of 7:10 am, Germany’s DAX up 0.82% and both the UK FTSE 100 and France’s CAC 40 ahead by roughly 0.76%. S&P 500 futures are 0.20% firmer, the US 10-year Treasury yield is at 4.891%, the DXY stands at 101.57 and gold (XAUUSD) is trading at $4,130.17.
EURUSD has slid back toward the bottom of a 1.1220-1.1269 range, surrendering its early gains and leaving the euro flat on the day. Eurozone producer prices climbed 11.1% y/y in September, hotter than the 10.7% forecast, while the 2.5% monthly rise matched expectations.
GBPUSD is holding in a 1.3459-1.3501 band after the Bank of England raised rates a quarter point to 4.0%.. The vote was 8-1, and the lone holdout wanted a half-point hike. The BoE warned that inflation could hit 5.0% in 2027 and pinning the blame on the Iran war (Trump?).
USDJPY bottomed out in Asia and then climbed back to the top of a 157.79-158.44 range in early NY trading as profit-taking sparked a bounce in the US dollar. Democrats may run Congress, but the Fed hasn’t lost its hawkish streak. The September BoJ minutes revealed a bias toward quicker rate hikes.
AUDUSD is digesting yesterday’s gains inside a narrow 0.7000-0.7025 corridor. Support is coming from a ballooning trade surplus of $2.83 billion, more than double the $1.2 billion forecast and a huge jump from $184 million in August.
The Canadian calendar is empty today. In the US, weekly jobless claims are forecast at 194,000, and a number anywhere near that will barely register.
